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Extractive Industries

Samuel N. Addy, University of AlabamaAhmad Ijaz, University of Alabama

Extractive industries in Alabama include oil and gas extraction; mining, primarily of coal but also some other minerals; and support activities for mining. In 2006, the total value of goods and services produced by these industries, or their contribution to Alabama gross domestic product (ALGDP) was $1.2 billion, accounting for about 0.8 percent of ALGDP; with oil and gas extraction contributing $477 million; mining $582 million; and support activities for mining $151 million. Combined, the industries employed approximately 13,000 workers in 2008, with wages being among the highest in the state. Exports of products from Alabama's extractive industries have risen from $224 million in 2000 to nearly $1.2 billion in 2008 a nearly 413 percent increase. Their share of total state exports went from 3.0 percent to slightly more than 7.0 percent; the industry is now ranked third among Alabama's largest export categories.

Oil and Gas Extraction

Oil RigAlabama's oil and gas industry is engaged in crude petroleum and liquid and natural gas extraction. The companies perform all activities in recovering oil and gas and making them ready for shipment; refining is not a major component of this industry. The output of these firms earned $477 million in 2006. The industry provided earnings totaling $222 million in 2006 and employed 2,407 workers in 2007. Although petroleum and coal products exports have risen sharply from $2.2 million in 2000 to almost $175 million in 2008, oil and gas extraction exports have dropped from about $1.4 million to $356,000. For the industry, each $1 worth of production generates $1.6 in total output statewide, each $1 in earnings results in $1.2 in additional indirect earnings, and each job generates 3.3 additional jobs for a total employment impact of 4.3 jobs.

Support Activities for Mining

Firms in this category provide services in drilling oil and gas wells; support activities for oil and gas operations; and support activities for the mining of coal, metals, and nonmetallic minerals. In 2006, the output of this industry in the state was $151 million, about 12.5 percent of extractive industries' contribution to ALGDP. Earnings for these firms totaled approximately $83 million in 2007, and they employed about 1,300 workers. The total earnings comprise wages and salary paid to part-time and full-time workers as well as profits and distributions given to proprietors and other stakeholders. Every $1 of output produced by firms providing support activities for mining generates $1.9 in total production statewide. Each $1 in earnings has a total statewide of $2.1 in earnings and each industry job results in almost three jobs in other sectors of the state economy.

Coal Mining

Birmingham Coal Mine, 1908The coal mining industry has significant impacts on the Alabama economy. Every $1 in earnings has a total impact of slightly over $2 statewide and the total employment impact is 2.9 jobs per industry job. Each $1 of industry production results in nearly $2 in statewide economic output and 13.1 jobs are created for every $1 million in investment in the industry. These impacts result from the high wages in the industry. Total coal-mining production in 2006 was 19,270,455 tons. The industry output in that year was $582 million, significantly below its peak in 1998, when production totaled $833 million. The industry employed 6,300 workers in Alabama in 2008. Coal mines are the major extractive industry employers in the state. Counties that had underground coal-mining operations in 2006 included Fayette, Jefferson, Shelby, Tuscaloosa, and Walker. Surface coal-mining operations exist in Bibb, Cullman, Franklin, Jackson, Jefferson, Marion, Shelby, Tuscaloosa, Walker, and Winston counties.

Other Products

Sylacauga Marble QuarryOther products mined in Alabama include limestone, dolomite, granite, marble, shale, bauxite, clay, sand, sandstone, sand and clay, sand and gravel, and quartzite. The combined employment for these products was close to 2,000 workers. Major mining companies in the state include Drummond Company, Inc. and Jim Walter Resources, Inc. Other large mining operations with more than 100 employees in various counties include the Pittsburg & Midway Coal Mining Company and Quinton Mining, L.L.C.